How e-commerce startups are helping small businesses go online

Startups have figured out that an online identity without dynamic inventory management and payment gateway is not a recipe for success.Anand J | TNN | April 11, 2016, 08:23 IST

The next wave of e-commerce in India will be driven by millions of small merchants taking their businesses online. A host of startups is helping retailers get a web presence, build their brand and make more money

Atul Tater has been selling his apparel on Flipkart and Amazon for six months, and sees about ten garments take off every day. He pays 25-30% commission per sale to the marketplaces.

Three months ago, Singapore-based e-commerce company Shopmatic approached Tater to build a website for his brand, Reevolution. He signed up quickly since it came for Rs 1,400 a month and included a Facebook page shop, an inventory management tool and a payment gateway.

"If I had set out to start my own dynamic website, it would have cost upwards of Rs 50,000," says Tater. Though he'll continue to sell on the marketplaces, the idea of not having to shell out 30% commission comes as a relief to the Noida-based businessman.

For small merchants like Tater, the cost of setting up a website, managing inventory and logistics and establishing a payment gateway can be intimidating. And that's where e-commerce companies are stepping in.

The opportunity to take small businesses online is seen as the next big e-commerce wave. Search giant Google started its 'India Get Your Business Online' project in 2011 to do the same, but didn't succeed.

However, startups that have come later have figured out that an online identity without dynamic inventory management and payment gateway is not a recipe for success. These startups provide complete solutions to take brick-and-mortar retailers online.

Early-stage investor Blume Ventures has four investments in the space - Snapbizz, Zopper, NowFloats and Instamojo. Its founder and managing partner Karthik Reddy says he is very bullish on such startups. The top 10 funded startups in the domain have raised upwards of $60 million in the last few years, according to startups ecosystem tracking platform Tracxn.

In China, there are 40 million small businesses, but only 12 million have an online presence. In India, the numbers are far worse - of the 60 million small businesses, only a million are online.

"It is not a question of either being on a marketplace or having one's own website. A seller needs to have a presence across the range of platforms where the customer comes. Large marketplaces don't cater to micro merchants and in many cases the demand is local," says Reddy, adding that discovery is also an issue for small merchants on big marketplaces.

For most sellers, the idea is not to miss a single lead that comes their way. Yet, they do not want the trouble of building and managing an ecommerce store.

Shopmatic co-founder and CEO Anurag Avula says his platform takes away all these pain points. For instance, making changes to inventory or uploading photos is a matter of drag-and-drop. "We take care of design, look, user interface, user experience. The customization is at a high level; even the font will be according to the theme of that particular seller," he says.

Hyderabad-based NowFloats, which not only gets small businesses online but also drives traffic to the websites, has drawn in more than two lakh sellers since it was started in 2011 by Jasminder Singh Gulati, Ronak Kumar Samantray, Nitin Jain and Neeraj Sabharwal. "A web identity alone does not solve the problem. You need to provide a personalized solution," says Samantray.

Inspired by an artificial intelligence-based global web design platform, Grid.io, NowFloats has automated the process of how a website should look. "That is the going to be the differentiator in the long run," he says, adding that the company has sales teams in 17 states and a few African countries.

In a mobile-first country like India, the players are also taking these business to the app platform. Kraftly, which raised $8 million last month, has more than 15,000 shops listed on its platform.It is targeting small seller communities and home-entrepreneurs in categories such as apparel, accessories, home, crafts, and other eclectic products.

Bengaluru-based Goodbox is a chatbased assistant to buy goods and services from 1,500 local merchants on an app. It also lets customers make payments online.

These platforms also help the merchants with data analytics, search engine optimization, email campaigns and buying ads on Google. Most of the startups are run as a software as a service (SaaS) businesses.

Infosys co-founder and chairman of Axilor accelerator Kris Gopalakrishnan, an investor in one such platform, Sellerworx, says the huge opportunity has resulted in plethora of different models and all kinds of experiments.

"Even as mainstream e-commerce flourishes in the country, an own channel is always attractive for a brand to drive more sales," he says. "Despite the presence of so many players, consolidation is some time away. Only a few will emerge big and successful," he adds.